Wayfair Q1 loss smaller than expected; cites progress toward profitability
Wayfair Inc. reported revenue that beat analysts’ estimates and a narrower-than-expected first-quarter loss amid cost-cutting efforts.
Earlier this year, the online home furnishings giant said it was laying off approximately 1,750 employees — representing 10% of its global workforce as of the end of 2022 —as part of its previously announced cost-cutting plan. Wayfair expects to save $750 million a year from the job cuts. The company’s total cost-cutting plan is expected to result in $1.4 billion in annual savings.
Wayfair reported a net loss of $355 million for the quarter ended March 31, compared to a loss of $319 million for the year-ago period. Adjusted loss per share was $1.13, compared to a loss of $1.96 per share last year. Analysts had expected a loss of $1.72 per share.
The adjusted EBITDA loss was $14 million, down from $113 million a year ago.
Total net revenue fell 7.3% to $2.77 billion, ahead of Street forecasts of $2.74 billion. U.S. net revenue fell by 5% to $2.4 billion.
Wayfair’s active customers totaled 21.7 million as of March 31, which was down 14.6% year-over-year. The average order value was $287, flat with the previous year. Repeat customers placed 79.1% of total orders delivered in the quarter compared to 77.7% last year.
Wayfair reported its results days after it debuted a “digital design studio” kiosk at its AllModern store in Dedham, Mass., that allows customers to create and interact with a variety of design layouts and experience products in a digital 3D room with photorealistic quality.
“This was a strong quarter for Wayfair, and we are pleased to be seeing consistent market share gains and a significant improvement in cost structure versus last quarter that gets us to nearly adjusted EBITDA breakeven in Q1,” stated Niraj Shah CEO, co-founder and co-chairman, Wayfair.
Shah added that the company expects to have positive adjusted EBITDA in the second quarter.
“We have always known, and now we are clearly demonstrating that the Wayfair model is inherently profitable and that there is considerable opportunity in front of us to rapidly drive further margin expansion,” he said. “Last August, we shared a roadmap laying out our path to profitability and we have been executing against that plan. Through a focus on our three core initiatives of driving customer and supplier loyalty, nailing the basics, and cost efficiency, we have made significant strides in improving our offering and customer experience, simultaneously reducing our cost structure while investing for future growth.”
Wayfair generated $12.0 billion in net revenue for the twelve months ended March 31, 2023. The company’s brands include Wayfair, Joss & Main, AllModern, Birch Lane, Perigold, and Wayfair Professional.